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Saudi, Russia extend oil cuts, sending prices higher

July 4, 2023 at 12:29 pm

OPEC building [Zamoto Media/Facebook]

Saudi Arabia and Russia, the world’s biggest oil exporters, yesterday deepened oil cuts, sending prices higher despite concerns over a global economic slowdown and possible further interest rate increases from the US Federal Reserve, Reuters reported.

OPEC+, which groups the Organisation of Petroleum Exporting Countries (OPEC) and allies led by Russia, cut supply to boost prices in November last year due to reduced Chinese demand and rising US supply but so far has failed to raise prices from a range of $70-$80 a barrel.

Saudi Arabia said it would extend its voluntary oil output cut of one million barrels per day (bpd) for another month to include August, adding that the cut could be extended beyond that month.

Shortly after the Saudi announcement, Russian Deputy Prime Minister Alexander Novak said Moscow would cut its oil exports by 500,000 barrels per day in August.

The cuts amount to 1.5 per cent of global supply and bring the total pledged by OPEC+ to 5.16 million bpd.

Later yesterday, Algeria said it would cut oil output by an extra 20,000 barrels in August to support efforts by Saudi Arabia and Russia to balance and stabilise oil markets, its energy ministry said.

READ: Russia to cut oil exports by 500,000 bpd in August, oil rises

The voluntary cut will be on top of a 48,000 barrel reduction decided in April, it said.

Libyan Oil Minister Mohamed Oun said his country welcomed the Saudi decision which will have a “positive impact on market balance between global producers, consumers, and on global economy.”

OPEC+, which pumps around 40 per cent of the world’s crude oil, already has in place cuts of 3.66 million bpd, amounting to 3.6 per cent of global demand, including two million bpd agreed last year and voluntary cuts of 1.66 million bpd agreed in April and extended to December 2024.

Russia, the world’s second largest oil exporter after Saudi Arabia, has already pledged to reduce its output by 500,000 barrels per day (bpd) to 9.5 million bpd from March until year-end.